Capita up 41pc after £700m new contracts

CAPITA, the UK's biggest outsourcing company, unveiled a 41pc rise in pre-tax profit on the back of £700m of new contracts from the public and private sector.

Capita, which provides a range of services ranging from human resoures, call centres and software property management, made £51.4m in 2000 before tax, amortisation and goodwill, up from £36.3m last year.

The results were at the top end of analysts' expectations, but the shares slipped 5 to close at 369p, however, on worries that Capita will not be able to maintain its margins and spectacular profit growth.

However, finance director Paul Pindar said Capita was facing little pressure to reduce prices. "I don't subscribe to the argument that there is price pressure - we only subscribe to the deals where we find the prices are acceptable."

Local authorities, schools and hospitals are all outsourcing their back office functions in an effort to reduce costs, and Capita now estimates the UK market to be worth about £30 billion. In July it won its largest ever deal, a £400m contract to manage the UK's criminal records bureau.